Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

Archive for April, 2007

And this absolutely scary and huge hole opened up last week in the downtown area of Caracas, in the El Manicomio area near the Avila mountain. Scary no? I certainly would not like ti be living anywhere close to it!

Some tragedies lurked around on what should have otherwise
been a wonderful family day today, but one tries to put on the best face
possible, even when important people were missing from our family celebration.

Health care took the top of the headlines today in El
Nacional, as we learned that the Government pays more than 50% of what the
Ministry of Health spends overall on paying private health insurance for its
workers. This has reached these proportions after Government hospitals have
deteriorated in the last few years. The new Health care Bill will effectively
bar this for Government workers, making them pay for it and will force private
workers to pay 20% of their healthcare, while employers pay 80%.

Then, in El Universal, there
is an interview with Marino Gonzalez, whom I have translated here often.
Marino points out how the Chavez Government seems to be going towards a model
in which workers pay for their own healthcare, exactly the opposite of the
trends elsewhere, which he finds ironic, given the social claims of the
Government. Essentially, Gonzalez points out that if you make the workers pay
for their own healthcare policies for surgery, hospitalization and maternity,
then they will ask for private healthcare which essentially formalizes the
privatization of healthcare that has been going on in the last few years under
Chavismo.

Gonzalez also blasts the centralization of healthcare that
Chavez is promoting and then proceeds to give incredible bad numbers about the
state of health care in Venezuela. Besides the case of measles that we posted
on earlier, he notes that malaria and dengue fever have increased by 30% in the
last year, how maternal mortality has increased by 20% since 1998 and how 20
kids per day die due to either diarrhea or birth problems. Mind you, these are
officials numbers if anyone wants to question their reality and Gonzalez is a
medical doctor with a Ph.D. in public policy.

Separately, that same issue of El Universal notes
that while the Government wants to regulate the price of private health care,
the cost of having a bed at a Government hospital is three times that of
private hospitals, demonstrating how inefficient Government spending can be.
Meanwhile, Barrio Adentro IV, for which Cuba received last year US$ 1.3
billion, has yet to be launched and construction
in many states of new modules is not moving rapidly. Moreover, the School
of Medical Doctors claims that 49% of the Barrio Adentro Modules are not
functioning nationwide.

The solution is not to centralize healthcare and least of
all to eliminate insurance in the public sector. The solution is to start
strengthening the network of hospitals and clinics the Government has, which
have been totally neglected since Chavez took over as he gave priority to the
emergency care of Barrio Adentro. Any regulation of private healthcare will
simply reduce the availability of the current system, much like price controls
have made certain goods scarce in the country’s supermarkets.

When I first read the paper by Corrales and Penfold, which I posted yesterday and which
appeared in the Journal of Democracy, 18,
99 (2007), I thought I would highlight a few paragraphs in a post and leave it at that.
But then I realized that there was little, if any, material that should not be
there and the piece should be read as a whole. It not only provides an
excellent reference to most of the political events of the last eight years,
but it does so in very clear fashion, without wasting time on the details as
much of what is said can be readily be found in many places, including this and
other English speaking blogs. Perhaps the only point not mentioned that should have been in the paper is the bridge between the Constituent Assembly and the new
Constitutional order which was the infamous “Congresillo” which without any
legal or Constitutional basis, ran the country for months and appointed many of the so
called “independent” powers that we still have today.

But there are a few points that need to be emphasized that
are brought up in the paper that I think are relevant to both newcomers to
Venezuela’s Chavista history, as well as those that have followed it from the
beginning, because we either sometimes have a short memory, or because they
reveal the levels of improvisation and and how for Chavismo politics is the goal in itself :

—The paper correctly reminds us of one of the most
surprising aspects of Chavismo for its first four or five years: Its
inattention to social programs. Chávez not only cancelled most of the social
programs his Government inherited, but the only new effort created up to 2003
was the Bolivar 2000 program, an infrastructure program led by the military
which was mired in corruption and left very few tangible accomplishments. It
was only the low popularity enjoyed by the President that led to the “Misiones”
in late 2003.

This is important not only as a historical fact, but also as
a reminder that Chavismo has spent eight years improvising and changing
directions. Even today, XXIst. Century Socialism is an ill defined concept and
many of the “battles” of the last two years, represent exactly the opposite of
what Chavez was pushing for in 2001-2002. A good case in point is the heavy
crude partnerships of the Orinoco Oil Belt, where one can still remember Chavez
telling French representatives that he wanted to expand these partnerships with
them, only to be taking them away from them today by force. Moreover, Chavez
offers tracts of the Orinoco Oil belt to other nations state oil companies, while at the same time it is
kicking out the national oil companies of Norway and France.

—The importance of clientislism in Chavez’ strategy is
another one of the salient points of the paper by Corrales and Penfold. The
proof of this is in how the resources of the misiones have little to do with
the needs of the people being helped. It is much more than improvisation in
this case, it is simply political. Resources are not allocated by the social
needs of the poor, but rather by the political needs of Chávez and his MVR
party. This obviously becomes very inefficient in terms of the goals of
fighting poverty or attacking health problems, which explains in part the lack
of results despite the huge resources spent.

—The paper talks about something which I have never
addressed in the blog, which is how Chavismo did away with campaign financing
in the 2000 Constitution which became a trap for the opposition, as the
mechanisms of intimidation have made it more difficult for other political
parties to obtain funding, while the line of division between Chavez’ MVR and
the Government is almost non-existent and state funds and institutions are used
without any scruples in political propaganda for Chavez. This has created a hug
asymmetry, in the words of Corrales and Penfold, which certainly is detrimental
to democracy. When Government campaign financing was eliminated in 2000, I
recall thinking it could not be good to do that, but at the time I was still
not conscious of the lack of scruples of Chavismo and how this would be used in
the future to nullify the opposition or outspend it, like in the December
Presidential election by a huge factor, without any possibility of a recourse
with any instance.

—Finally, there is corruption. There has always been
corruption in Venezuela, but the levels and the obscenity we have seen in the
last few years are simply hard to describe. The effect goes from the simple
signs of newly found wealth, symbolized by the Hummers that Chavismo seems to
enjoy driving, to the meteoric rise of relatives of the leaders of Chavismo as
multimillionaires, owners of banks, milk producing companies, farms and the
like. We are not talking people becoming wealthy; we are talking about people who
now own hundred million dollar enterprises, where no wealth at all existed in
1998 when Chavez came to power. And then, of course, are the friends of the
revolution, those that have piggybacked on Chavismo, or quietly “opposed”
Chavismo while becoming ten times wealthier than they were before. This
corruption actually flows from the corruption at the political level: These
people have had no qualms about enriching Government officials in order to
enrich themselves and this symbiotic relation has turned those on both sides
immensely rich. In eight short years, Chavismo has created a new oligarchy
through corruption that easily outnumbers the old one in both wealth and the
number of individuals who are now multimillionaires in US dollars. It is so
blatant, that he new oligarchy owns jets, where the old one had propeller
planes, and they can safely land in the La Carlota airport of Caracas, where
Chavez decreed three years ago that only helicopters could land. Those not as well connected, use
Aeropuerto Caracas, where jet planes have gone in these short eight years from
being 10% of the plane population to roughly 40%. Of course, the difference in
their prices is at least factor of ten.

This is a
very long article with a good synthesis of the last eight years from a political
point of view. It summarizes quite well what has happened and is happening
today in Venezuela.
I could not find a link to it, so I decided to post the whole text. It appeared in
the Journal of Democarcy

Venezuela:
Crowding out the opposition by Javier Corrales and Michael Penfold

For the past few
years, Venezuela’s
President Hugo Chávez Frías has enjoyed a favorable political situation at home.
Economic growth, fuel­ed by rising oil prices, has been spectacular since 2003.
Chávez and his allies have won four decisive electoral victories since 2004,
the most recent being his sweeping 63
percent walk to a fresh six-year term in the December 2006 presidential
race. And since 2005, the opposition has become increasingly tame, while street
turmoil is on the decline and seldom results in violence. In addition, Chávez
has achieved complete control of all check-and-balance institutions, including the
unicameral National Assembly, which after the opposition boycott of the
December 2005 elections now contains not a single opposition legislator. These
political advantages would be the envy of any world leader. And yet, Chávez has
been governing as if Venezuela
faces some kind of emer­gency. He has been busily concentrating more authority,
even receiv­ing a grant from the National Assembly of “enabling powers” to rule
by presidential decree for eighteen months starting in February 2007.

How did a
movement that began in 1998 as a grassroots effort to bring democracy back to
the masses turn into a drive to empower the executive branch at the expense of
every other actor? The acceleration of authoritarianism in Venezuela
cannot be explained by recourse to functional theories. These theories, which
draw on Guillermo O’Donnell’s famous explanation of the origins of bureaucratic
authori­tarianism in 1960s Latin America,
posit that authoritarianism grows out of chronic governability crises which
prompt actors—whether in office or opposition—to seize and
centralize power in order to cope with dire circumstances.1 Prior to
2004, one could argue that Venezuela was suf­fering from a governability
crisis—albeit one that was likely at least partly fabricated—and that this
crisis might justify some of Chávez’s increasing concentration of powers. Since
2004, however, Chávez has had almost no reason to feel politically threatened
or encumbered yet has notoriously leaped in the direction of authoritarianism.the rest is here

This is a
very long article with a good synthesis of the last eight years from a political
point of view. It summarizes quite well what has happened and is happening
today in Venezuela.
I could not find a link to it, so I decided to post the whole text. It appeared in
the Journal of Democracy in their April issue.

Venezuela:
Crowding out the opposition by Javier Corrales and Michael Penfold

For the past few
years, Venezuela’s
President Hugo Chávez Frías has enjoyed a favorable political situation at home.
Economic growth, fuel­ed by rising oil prices, has been spectacular since 2003.
Chávez and his allies have won four decisive electoral victories since 2004,
the most recent being his sweeping 63
percent walk to a fresh six-year term in the December 2006 presidential
race. And since 2005, the opposition has become increasingly tame, while street
turmoil is on the decline and seldom results in violence. In addition, Chávez
has achieved complete control of all check-and-balance institutions, including the
unicameral National Assembly, which after the opposition boycott of the
December 2005 elections now contains not a single opposition legislator. These
political advantages would be the envy of any world leader. And yet, Chávez has
been governing as if Venezuela
faces some kind of emer­gency. He has been busily concentrating more authority,
even receiv­ing a grant from the National Assembly of “enabling powers” to rule
by presidential decree for eighteen months starting in February 2007.

How did a
movement that began in 1998 as a grassroots effort to bring democracy back to
the masses turn into a drive to empower the executive branch at the expense of
every other actor? The acceleration of authoritarianism in Venezuela
cannot be explained by recourse to functional theories. These theories, which
draw on Guillermo O’Donnell’s famous explanation of the origins of bureaucratic
authori­tarianism in 1960s Latin America,
posit that authoritarianism grows out of chronic governability crises which
prompt actors—whether in office or opposition—to seize and
centralize power in order to cope with dire circumstances.1 Prior to
2004, one could argue that Venezuela was suf­fering from a governability
crisis—albeit one that was likely at least partly fabricated—and that this
crisis might justify some of Chávez’s increasing concentration of powers. Since
2004, however, Chávez has had almost no reason to feel politically threatened
or encumbered yet has notoriously leaped in the direction of authoritarianism.

A necessary
condition for this leap has been what Nancy Bermeo would call “elite
intentions”—that is, the ideologies of elected politi­cians as well as their “misreadings” of the preferences of larger
constitu­encies.2 But motive alone is not sufficient; means
and opportunity are needed as well. In Chávez’s Venezuela,
these have come in the form of economic resources at the state’s disposal together with weakened in­stitutions of
representation. In addition, it is crucial to underscore the president’s
deliberate political strategies: his use of polarization, clien­telism, offers
of the opportunity to engage in corruption with impunity, and discrimination in
favor of supporters when filling government-con­trolled jobs coupled with threats to see to it that foes are fired. A reviewof key moments in Venezuela’s
transition toward authoritarianism will make it easier to see how state
resources both tangible and intangible can interact with rising
authoritarianism.

Venezuela’s
New Political Regime

Chávez never
tires of proclaiming a commitment to participatory rather than liberal
democracy. He is right that Venezuela
is moving away from liberal democracy, but he is not replacing it with more par­ticipation. Instead, Chávez is creating what many
classical-liberal think­ers feared most: a quasi-tyranny of the
majority. The Chávez regime has emerged as an example of how leaders can
exploit both state resources and the public’s widespread desire for change to
crowd out the opposi­tion, and, by extension, democracy.

Between 1999
and 2003, the rise of authoritarianism in Venezuela
followed a consistent pattern: The government would target institutions almost
one at a time, attempting to strip each of power in turn. The opposition would
protest, and the government would answer by becom­ing more hard-line and
exclusionary.3 Starting in late 2003, this game took a turn as the
government wheeled out a fresh tactic—heavy bar­rages of state spending aimed
at rewarding loyalists and punishing dis­sidents.
This new artillery, as we will show, left the opposition disarmed.

Chávez, a former army lieutenant-colonel who had spent
time in jail for leading a 1992 coup attempt, began the process of regime
change with the rewriting of the constitution shortly after he won his first
presi­dential election in December 1998. He could have started by focusing on
the flagging economy, but instead aimed to rewrite the rules governing
relations among the branches of government in order to make the presidency
stronger. In what is now becoming a trend in the region, Chávez began 1999 by
appealing to voters’ widespread antiparty feel­ings and convoking a National
Constituent Assembly explicitly de­signed to kill the partidocracia (party dominance) that had
character­ized Venezuelan politics since the late 1960s. The weakening of the
nonexecutive branches he sold as a means of “stabbing to death” the “moribund”
traditional parties that were holding onto power within and through those
branches

Chávez’s first conquest was to ensure himself overwhelming
control of the Constituent Assembly. He did this by manipulating a self-serving
system for selecting delegates (elections were by plurality and took place within districts of varying sizes at the
state level) through a clever nomination strategy that rationed
candidates from his coalition across districts and coordinated the vote from
his supporters using ad-hoc lists (known as “kino cardboards”) which helped to
identify official candi­dates with the adequate numbers for each district.

The new president’s camp drew only 53 percent of the vote but wound up with 93 percent of the seats and
a free hand to rewrite the basic law. The predictable result was the most
heavily presidentialist constitution in contemporary Latin America.4
The presidential term went from five to six years, with the possibility of a
single reelection. The president obtained complete discretion over military
promotions with no need for legislative approval. The Senate was eliminated.
The president gained the power to enact laws and to hold any kind of referendum
without support from the legislature. Public financing for political par­ties
was banned. The constitution did introduce the possibility of re­calling
mayors, governors, or the president, but only under highly strin­gent
conditions.

By dramatically
raising both the advantages of holding office and the costs of being in
opposition, this constitution produced what schol­ars call a “high-stake power”
political system.5 In such a case, incum­bents’ incentives to share
power shrink, as does the opposition’s room to accept the status quo. The
opposition, feeling shut out and stripped of other means to affect policy, soon
begins staging street protests in hopes of guarding what few bastions it still
holds.

Chávez replaced the old party-based system with a new
focus on the presidency. The old system had begun with the 1958 interparty
agree­ment known as the Pact of Punto Fijo.
By the 1970s, the system was well known
worldwide as a paradigmatic example of how such deals can lead to
democracy even in unlikely places. By the 1990s, however, Venezu­ela had become famous as a case study of how pacting
parties can ossify until voters reject them in disgust. Chávez exploited
this disgust to weaken legislative powers, after which it became easier for him
to pack the high court and tighten control over the attorney-general, the comp-troller-general,
and the military. The executive branch also acquired control over the National
Electoral Council (CNE), the body that gov­erns electoral affairs. For the
first time in Venezuela’s
democratic his­tory, doubts began to arise concerning the fairness of electoral
rule.6 With the executive rampant, the next step was to rearrange
state-society relations.

The Politics of Polarize and Punish

In 2001, Chávez obtained from the legislature “enabling powers” to rule
by decree in certain policy areas, mostly having to do with property rights in the hydrocarbon and
agricultural sectors. When he threatened to seek the same sort of control over
public education, broad sectors of society expressed shock at what seemed a
gratuitous power grab. Then they responded with what amounted to a kind of
allergic reaction in the body politic: Business and labor groups, civil society
organizations, and political parties both old and new began to promote national
pro­tests, including a two-day civil stoppage in December 2001. By 2002, the
country was gripped by the worst polarization that Latin America had seen since
the heyday of the Sandinistas in 1980s Nicaragua.

For two
years, the opposition seemed to have the upper hand. Be­tween 2001 and 2003,
the ruling coalition suffered defections in record numbers (from the cabinet, the legislature, and even the military). On
11 April 2002, in the midst of one of the most massive civil protests in
Latin America’s
history, business leader Pedro Carmona and a military faction staged a coup that briefly removed Chávez from power. Carmona swiftly
turned highly punitive against chavistas, dissolved
the National Assembly, and dismissed the elected state governors. His support
col­lapsed and Chávez returned in less than 48 hours from exile at an off­shore
navy base. Although many in the opposition had abandoned Carmona almost
immediately, the episode damaged the anti-Chávez cause by tarring it with the golpista (coupmaker) label.

With
international mediation efforts failing and Chávez refusing to negotiate, the
opposition chose as its new tack a two-month strike by workers and managers
from the state oil company, PDVSA. As oil pro­duction dried up, Chávez fired
almost 60 percent of PDVSA’s staff and ordered the military to take over the
hydrocarbon industry. The hard times that
ensued—GDP shrank by 17.6 percent in 2003—hurt the presi­dent less than
it hurt the strikers, and they blinked first.

The
opposition then went to Plan C: a recall referendum. This first truly electoral
challenge to Chávez faced a high hurdle, however, for the 1999 constitution
demands that proponents of recalling a president must first collect valid
signatures from a fifth of all registered voters and then must obtain not
merely a majority but more votes for recall than the incumbent gained in the
previous election. Although the Chávez camp bombarded the
opposition with an array of legal and administra­tive obstacles to
valid-signature collection, the CNE finally ruled in March 2004 that the
opposition had gathered more than enough, and that
there would be a referendum. This was the administration’s weakest moment,
the closest it came to succumbing. Polls showed the opposi­tion far ahead.
Again, however, the government did not respond by softening its exclusionary
policies. Instead, it met this new threat from below with that familiar standby
of Latin American politics, vintage populism.

Before the
April 2002 coup, Chávez had been relatively inattentive to social spending, and
in fact had dismantled most of the social pro­grams left behind by the previous
administration. Social spending de­clined in real terms during the early Chávez
years, and the only social programs that survived were mainly delegated to the
military. But in late 2003, reaping an oil windfall and facing the prospect of
a real elec­toral challenge, Chávez launched what on his weekly television show
he liked to call “missions to save the people.” The deluge of money that he
poured out in 2004 (close to 4 percent of GDP) enabled him to turn his low 2003
approval ratings of around 45 percent into a 59 percent victory in the August
2004 recall referendum. Dismayed oppositionists claimed fraud, but international
observers from the Organization of American
States, the Carter Center, and
the UN Development Programme found no merit in these charges.

Dumbfounded
by the stunning reversal of fortune that Chávez had engineered in just four
months, the opposition went into a postreferendum coma and barely contested the
October 2004 elections for regional office. Chávez’s partisans took over 21 of
the 23 state gov­ernments and more than 90 percent of the municipalities. In
addition, the administration packed the Supreme Court with a dozen new judges,
each one an avowed friend of the president’s “Bolivarian revolution.”

In short, Venezuela
switched from a situation of heightened power competition in 2003 to one of
energy asymmetry in 2005: The regime grew bolder, and the opposition grew more
hopeless. Exhausted and discouraged, opposition leaders greeted revelations
that the govern­ment could use the automated voting system to trace voter
identity with a decision to sit out the December 2005 National Assembly
elections.

By early 2006, the opposition had virtually capitulated.
Every one of its strategies had failed. Massive mobilizations, labor strikes,
the recall, appeals to the international community, and electoral participa­tion
had produced nothing but waning power and fewer concessions from the
government. The opposition ran out of options and gas at least in part because
in Venezuela,
as in any oil-exporting country in which the state dominates the petrochemical
sector, the government controls the fuel both literally and figuratively, and
can give it to friends while keeping it away from foes.

Unlike the recall vote two years
earlier, the December 2006 presiden­tial election featured no claims of fraud. The CNE
approved a manual audit of the votes that both local and international
observers regarded as confirming the official results. Chávez won at least 50
percent in every state, including Zulia, the home of opposition standard-bearer
Manuel Rosales. The election featured both the highest level of turnout (just
under 75 percent) and the widest margin of victory in Venezuelan history,
adding one more to the string of consecutive elections since 1998 in which
Chávez has broadened his margin among the voters. Chávez garnered a larger
share of the vote in rural states, in four of the five oil states, and in urban centers such as the Capital District of
Caracas. The one glimmer of hope for the opposition was the
concentration of its vote in just two parties, Un Nuevo Tiempo and Primero
Justicia. This could be a sign that opposition voters are rethinking their
post-1992 tendency to turn away from
parties—a trend that has weakened society’s capacity to hold
authoritarianism in check.7

Social Spending and Rising
Authoritarianism

Between 1989 and 1998, Venezuelan voters repeatedly turned against efforts by presidents to
concentrate power.8 How did Chávez manage to prevent this electoral
sentiment, so strong in the 1990s, from unseating him in the following decade?

To understand
Chávez’s electoral fortunes since 2004, it helps to clarify the symbiotic
relationship between clientelistic spending and declining check-and-balance
institutions. When such institutions lose power
amid a growing economy, the incumbent can raise spending while making it
more discretionary. Opportunities for clientelism expand and with them the
votes that the incumbent commands, while institutions of accountability suffer
more erosion.

Clientelism
is one approach to social spending. Other approaches include: 1) underfunding,
2) cronyism, and 3) spending that is meant to and actually does benefit the
poor (what the World Bank calls “pro­poor spending”). 9 Underfunding
happens when governments fail to pro­vide sufficient funds for social programs.
Cronyism consists of social spending that in
reality is mere camouflage for direct subsidies to elites, mostly “friends and family” of incumbents.
Clientelism refers to spend­ing that, unlike cronyism, is directed
toward nonelites, but is nonethe­less offered conditionally: The state expects
some kind of political favor back from the grantee. Finally, pro-poor spending
occurs when aid is offered on grounds of true need and without political
conditions attached.

All democracies engage in all four
types of spending, though propor­tions vary across countries, programs, and eras. The key
question is which direction a newly elected administration takes when it change

TABLE—FOUR TYPES OF SOCIAL SPENDING

CONSTRAINED BY

INSTITUTIONS

NOT CONSTRAINED BY

INSTITUTIONS

High competition

Pro-poor
spending

Clientelism

Low competition

Underfunding

Cronyism
(friends and family)

the
inherited proportions. We suggest that the answer depends on the degree of
political competition and the strength of domestic check­and-balance
institutions at the relevant time.

Political
competition refers to the difference in political force be­tween the incumbent and the opposition.
Competition is relatively weak if the
opposition musters few votes, has reduced access to state office, or has
no immediate opportunity to challenge the government at the polls.
Institutional accountability will be stronger when presidents face con­straints
from the legislative branch, whether structural (such as high levels of
legislative authority over budgets) or circumstantial (such as when the
opposition party or coalition controls a legislative chamber). An opposition
that is competitive and in possession of robust account­ability tools will be
better able to oversee the administration, and con­tain the executive’s
temptation to use social policy self-servingly. All this favors “pro-poor”
spending over “vote-buying” spending.

Varying degrees of these two democratic conditions—competiveness and
accountability—will yield different results in terms of social spend­ing (see Table). The worst
situation for the poor is low political compe­tition. Incumbents feel no
pressure and thus have no incentive to seek more
(or more reliable) votes through expanded spending. Social spend­ing
will remain sparse and, if institutions of accountability are weak, all too easily divertible toward cronyism. Heightened
competition will drive incumbents toward the cultivation of wider voter
support and thus pro­mote spending, but with no guarantee that it will be aimed
at helping the poor rather than at helping administration clients. The best
safe­guard against clientelism comes from the other key variable: checks on the
arbitrariness of state officials.

In short,
pro-poor spending is most likely to occur when both politi­cal competition and
institutional constraints are strong. This proposi­tion helps to explain social
policy under Hugo Chávez. The first stage, from the approval of the new
constitution in 1999 to the beginning of the recall campaign in 2004,
represented the political shift from high to low accountability, leading to
underfunding leavened by cronyism. The second stage saw rising political
competition as the opposition began to focus on the recall referendum.
Competition prompted the executive to spend, and declining accountability
allowed it to spend opportunistically.

It is hard
to estimate the totality of state spending under Chávez, but the best sign of
its magnitude is that, despite the five-fold oil-priceincrease
over the last three years, the accumulated fiscal deficit reached 2.3 percent
of GDP in 2006.10 The government has created special nontransparent
funds, free of legislative oversight, that are believed to hold more than US$15
billion from the recent oil windfall. In 2005, the National Assembly approved a
modification of the Central Bank law to create one such fund by transferring $6
billion from international re­serves. Known
as the Development Fund (FONDEN), it is controlled by the executive
branch through the Ministry of Finance rather than the Central Bank (Venezuela’s
Central Bank, like most, was designed to be relatively insulated from direct
executive-branch influence). There is no information on how or even whether
this money has been used. In February 2006, the National Assembly approved another
transfer of $4 billion from the Central
Bank, and the president announced that PDVSA would transfer $100 million
dollars a week into FONDEN throughout the year, adding another $5.2 billion.

Evidence
shows that Chávez has distributed resources according to different political
criteria for different programs, but clientelism figures heavily in most of
them.11 While a program such as Misión Ribas was influenced by
considerations of poverty relief, it has also been used to “buy votes” at the
municipal level. Clientelism and poverty thus inter­act closely. Cash transfers
distribute oil income to the very poor—and also
cement support for Chávez. Other programs such as Barrio Adentro and
Mercal spend according to political criteria as well as demographic
considerations, namely, the size of the population. In these two “mis­sion”
programs, poverty variables have no influence in explaining the distribution of
resources at the state and municipal levels. What matters are the degrees of
administration loyalty that governors and mayors dis­play, plus the sheer numbers of potential voters who live in a given
area.

The
combination of opportunistic social spending and declining accountability has
had decisive political effects. On the one hand, it leads to favoritism and
thus polarization.12 On the other hand, it creates a state that is
virtually impossible to defeat through voting, since that state can always
heavily overmatch whatever resources the opposition can bring to bear.

In short, state
spending is born from democratic pressures (height­ened political competition),
but beyond a certain threshold of irregular­ity, it begins to undermine
democratic institutions, creating a playing field that is far from level.
Spending has given the Venezuelan govern­ment an advantage in competing for
votes: The opposition campaigns with words; the state, with words plus money.

Ambivalent Groups and Intangible State
Resources

Clientelistic
spending has not been Chávez’s only tool. Chavismoalso relies on two less tangible but equally powerful instruments. It
offers supporters de facto impunity to engage in corruption, and it prac­tices
job discrimination in their favor while using negative discrimina­tion against
those seen as government foes. These tools are reminiscent of the “inducements
and constraints” typical of traditional Latin Ameri­can corporatism.13Yet there is a difference. In classic
corporatism, orga­nized labor was typically the object of inducements
and constraints; under Chávez and other neopopulists,14 these tools
are applied to groups that are not necessarily organized and that may even be
amorphous. In Venezuela, these groups
consist mainly of voters who are neither strongly for nor strongly
against Chávez.

Locally, they
are called the “ni-nis” (neither-nors). Since early on, pollsters have found
substantial evidence of their salience. By July 2001, for instance, one
reputable poll was beginning to classify some Venezuelan voters as “repented chavistas.”15This category swelled from 14.7 percent
in July 2001 to 32.8 percent in December. Some of these chavistas became mild opponents of the
president, while others re­mained mild supporters. As late as 2006, as many as
30 percent of all those polled were professing themselves to be in either
“slight agree­ment” or “slight disagreement” with government policies.16
Thus, even in contexts of polarization, swing groups are nontrivial and likely
to grow in size. Consequently, even radical leftist governments will still need
to learn how to deal with the ambivalent middle. Impunity from prosecution and
job discrimination have been Chávez’s answers to the problem.

Impunity from
prosecution differs from clientelism in that the ben­efits pass from one strong
actor (in this case the state) to other strong actors (the military, perhaps,
or business groups). Like clientelism, the offer
of impunity is an appeal tailored to reach those who are not strongly aligned.
Because strong actors can wield a veto, not merely over policy but even over
the administration’s very survival, a government in a polarized setting must
deploy significant resources to assuage them.17 Furthermore, in
situations of radicalization it helps to have a mecha­nism for coopting
military and perhaps also business elites, if only as a shield against coups.
This might explain why in Venezuela
there is no competitive bidding for most government contracts, and why few indi­viduals
close to the government have been jailed for corruption. Like clientelism,
impunity has the effect of making beneficiaries intensely conservative—that is,
it makes them dread the prospect of a change in government out of worry that
such a change might end their privileges.

Job discrimination, both positive and negative, is
Chávez’s other strategy for winning or at least overawing ambivalent groups.
His ad­ministration says repeatedly that government jobs, contracts, and sub­sidies
will go exclusively to supporters. To make its implied threats of negative job
discrimination more pointed, the administration does all it can to publicize
the notion that it knows people’s voting behavior. The two best-known examples of this tactic are the
Súmate and Lista Tascón cases. Súmate is a nonprofit organization that Chávez
said had broken the law by receiving a $31,150 grant for voter education from
the U.S.­based National Endowment for Democracy.18 This
modest sum mattered less to the government than did Súmate’s heavy involvement
in collect­ing signatures to make the 2004 recall referendum possible. The
Lista Tascón bears the name of its compiler, chavista legislator Luis
Tascón, and includes voting data on citizens who signed the recall petition.
The list was openly published on the Internet and was explicitly used to make
citizens withdraw their signatures or else face being fired or de­nied access
to public contracts and social benefits. The Chávez administration’s intention
is clearly to convey that loyalists can gain and dissenters lose a great deal,
a dual signal meant to reach groups that are mostly untouched by
ideology and polarization.

After eight
years in power, the chavista coalition
has changed enor­mously. In 1999, it offered a progressive ideology that
promised to free Venezuela
from the stranglehold of the old parties and repeated eco­nomic crises. This
agenda favored change but not radicalism, and drew vast majorities. Since then,
the agenda has turned radical, winning the loyalty of the extreme left but at
the cost of polarization, with a large cluster of ambivalent groups in the
middle, together with a substantial number of new and old elites. The lavish
use of corruption, impunity, and job discrimination keeps these groups in
Chávez’s camp when it counts, and allows his government to increase its vote
beyond what the extreme left can deliver by itself.

The
oppostion’s dilemma

Dealing with
an uneven playing field, however daunting, is not the worst challenge that the
opposition faces in electoral contests where guarantees of fairness are flimsy
at best. The opposition also needs to overcome its internal divisions and, more
significantly, the tendency of its voters to abstain. In preparing for the 2006
presidential campaign, the opposition took significant steps to correct these
problems, but still did not go far enough.

The first step was to seek internal unity. The race began
with three reputable opposition candidates from varying ideological
backgrounds. The first was Teodoro Petkoff, a 1960s guerrilla leader who had
been planning minister under President Rafael Caldera in the 1990s and then
became editor of the well-regarded daily newspaper Tal Cual. Petkoff was joined by Julio Borges of the new
Primero Justicia party, which controlled a few municipal administrations, and
Governor Manuel Rosales of Zulia, an oil-producing state in the west. For a
while, it seemed that unity would prove impossible, and midyear arrived with no
agreement as to how a unity candidate might be chosen. To everyone’s
surprise, the candidates amicably agreed to let opinion polling identify the
strongest candidate. By early August, that was clearly Rosales. His rivals
endorsed him—another surprise that gave the opposition a boost.

The strong current of abstentionism posed a harder
problem. Six months before the December voting, many in the opposition (aware
of Chávez’s advantages) were still undecided about whether they would even
bother to cast their ballots. The conditions needed for a fair and transparent
contest remained in doubt. The opposition claimed consti­tutional and
electoral-code violations including: 1) a lack of indepen­dence in the CNE; 2)
an electronic voting system open to manipulation; 3) a suspicious swelling in
the ranks of likely pro-Chávez voters after the unscrutinized issuance of a
record number of voter registrations;19 4) a media tilt in favor of
the president;20 and 5) the administration’s breaking of
campaign-spending limits set by the CNE

Over the
course of 2006, the government addressed a few of these complaints. The CNE
allowed the Center for Electoral Assistance and Promotion (CAPEL), a group affiliated with the Inter-American System of
Human Rights, to audit the registration system. The CNE also al­lowed a group
of Venezuelan universities to audit voter registration, but the three most
prestigious schools21 disagreed with the CNE’s pro­posed statistical methodology and declined to take
part. Neither CAPEL nor the universities’ study found evidence that
registration was rigged, although they confirmed that the system did not guard
against the cast­ing of ballots by unregistered voters as fully as it might
have.

As with voter
registration, reforms regarding the actual voting sys­tem were partial. During
the runup to the 2005 legislative elections, analysts had learned that
officials could use polling-place fingerprint­identification machines together
with the electronic voting machines themselves to find out how individuals had
voted. The alarmed opposi­tion asked for manual voting, but the CNE dismissed
this request, argu­ing that the law required automated voting. At the last
minute, the op­position withdrew from the race, leaving every seat in the
National Assembly to be filled by pro-Chávez candidates. In preparation for the
2006 presidential elections, the OAS gave the CNE technical assistance to
reduce the possibility of tracing voting records through fingerprints, but the opposition pressed for more changes. The
government then agreed to remove the fingerprint machines from a
minority of polling stations, none of which lay in the most heavily peopled
precincts. The opposi­tion claimed that by keeping fingerprint machines in
these key spots, the government was trying to scare opposition voters away from
the polls.

The question of state funding—which
was flowing solely to Chávez— lay foremost in the opposition’s mind. In response, the CNE agreed to
ban public officials from using official acts for electoral purposes and to
limit the daily amount of televised advertising that each candidate could broadcast. When it came to enforcement,
however, the CNE was a no-show. In November 2006, for example, PDVSA
president Rafael Ramírez was caught on videotape telling employees to vote for
Chávez because the state-owned company was “red, very red” (roja, rojita), a reference to the
colors of the ruling party. Far from firing or even reprov­ing Ramírez, Chávez
congratulated him and urged other ministers and officers to repeat the message.
International observers in 2006 criti­cized the excessive state spending that
was helping Chávez just as they had in 2005, but in neither case were these
complaints of much avail.The failure to restrain the
unaccountable, politically minded spend­ing machine that Chávez had set up in
2003 meant that the conditions for fair competition were worse in 2006 than
they had been during the December 2005 National Assembly elections or the
August 2004 recall balloting. Even media access, once an opposition strong
point, had been reversed in the incumbent’s favor by a wave of cash. The govern­ment
invested more than $40 million in upgrading the state-owned tele­vision station
and the government news agency, established three more television stations,
acquired more than 145 local radio stations and 75 community newspapers, and
created dozens of administration-friendly websites.

The prospect
of a merely partial reform of the electoral system faced the opposition with a
dilemma. Going along would mean that many opposition voters would remain
dissatisfied, fearful, and inclined to abstain. Yet rejecting the reforms as
insufficient would lay the opposi­tion open to charges of recalcitrance and
disloyalty and possibly dam­age its
international reputation. The opposition leadership took a gamble in
favor of going along. But this hurt them with the absentionist anti­Chávez
forces even as it arguably helped to bolster the opposition’s appeal in the
eyes of the ambivalent. The wisdom of this gamble will likely remain a topic of
debate within opposition ranks for years to come. Nor, in all likelihood, will
this be the last time that the opposi­tion must make a hard strategic choice
with uncertain results.

“Nothing Can Stop the Revolution”

Chávez celebrated his 2006 victory by proclaiming that
“Nothing can stop the revolution!” He may well be right. All that the
opposition can do for now is watch him try to build what he calls “the
socialism of the twenty-first century.” His plan seems to have five parts. The
first is full use of his 2007 enabling law to change more than sixty pieces of
legislation without legislative approval. The second is the creation of a
“presidential committee” that will put to referenda such proposals as allowing
the unlimited reelection of incumbents and attaching even stricter conditions to recall votes. The third is
a redrawing of the admin­istrative and political map to curb the
influence of governors and mayors. The fourth is a renewed effort
to expand the role of the president’s “Bolivarian” ideology in the hiring and
training of public-school teach­ers. Finally, Chávez wants to found a
yet-to-be-specified set of “com­munal assemblies” that will compete with
existing local authorities. Chávez’s new
vice-president Jorge Rodríguez, who was the CNE’s presi­dent during its
least transparent period, calls this new phase of the re­gime—apparently
without irony—a “dictatorship of true democracy.”

At the same
time, Chávez has announced plans to nationalize the telecommunications and electricity sectors as well as to boost the
state’s involvement in agro-industry and banking. The telecommunications
policy will assert government control over CANTV, the firm that con­trols the
transmission of data from the automated voting system. Once this happens,
citizen confidence in ballot secrecy will plummet further and abstentionism by
oppositionists will rise. Moreover, by denounc­ing the local private media
company RCTV as golpista and
refusing to renew its broadcast licenses,
the Chávez government has made itself the first popularly elected
administration in Latin America since the
1980s blatantly to curtail press freedom. The RCTV affair shows how open is the
partisan political bias that now infects the government’s handling of economic
affairs.

Chávez’s
twenty-first–century socialism looks much like Latin
America’s mid-twentieth–century “hard corporatism” without the
physi­cal coercion.22In
Venezuela today, the opposition has ever fewer means and even incentives
to incur the cost of trying to stop authoritarian leaps. The problem goes
beyond mere internal divisions within the op­position, crippling as those might
be. The core problem is that the op­position finds itself on the short end of a
sharp asymmetry in political resources
vis-`a-vis the state. Private donations are the opposition’s only recourse,
but the state’s offers of impunity and threats or promises of contract
discrimination threaten to close these off too as business elites become
coopted by the new order.

One often
hears that the unlimited spending
of money on election campaigns hurts democracy. Yet uneven campaign financing may be still worse. In Venezuela,
this unevenness has come about not simply because the state under Chávez has
raked in more oil money, but also because institutional constraints have been
wearing away under a de­liberate assault. This erosion of constraints generated
the 2002–2004 governability crisis, rather than the other way around. Chávez
turned back this critical challenge to his rule with policies of polarization,
selective impunity, and job discrimination, in the process building a dominant
coalition of radicalized ideologues and plentiful economic winners. Clearly
some of these winners are low-income Venezuelans. But others are members of
old-fashioned elites and do not look all that different from such winners of
the Punto Fijo era as military officers, government employees, and state
contractors. As of now, this coalition is majoritarian, but it is
hardly being mobilized for democratic gains. The story of Venezuela since
Chávez’s rise to power shows how, when democratic
institutions are defective, social spending may all too readily be bent
not toward correcting, but rather toward entrenching and even exacerbating
these defects.

NOTES

1. Guillermo O’Donnell, Modernization and
Bureaucratic-Authoritarianism; Studies in South American Politics (Berkeley:
Institute of International Studies, University of California, 1973).

2. Nancy Bermeo, Ordinary People in Extraordinary Times: The Citizenry and
the Breakdown of Democracy (Princeton: Princeton
University Press, 2003).

3. Javier Corrales, “In Search of a Theory of Polarization: Lessons from Ven­ezuela,
1999–2005,” European Review of Latin American and Caribbean
Studies 79 (October 2005): 105–18.

19. The
opposition wondered about the hard-to-explain 11.7 percent increase in
registered voters that was noted during the brief time between April and
October 2004.

20. By September
2006, Chávez was using three times the airtime allowed by CNE regulations, and
this count leaves aside his famous Aló Presidente Sunday
television show, which would add another several hours per week. See the report of Ciudadanía Activa, “Abuso Presidencial
en los Medios de Comunicación del Estado,” Caracas, 2006.

21. These were the Universidad Simón Bolívar, the Universidad Central de
Venezuela, and the Universidad Católica Andrés Bello.

22. Alfred Stepan, “State Power in the
Southern Cone of Latin America,”
in Peter Evans, Dietrich Rueschemeyer, and Theda Skocpol, eds., Bringing the
State Back In (New York: Cambridge University Press, 1985).

The Inter American Commission on Human Rights sued
the Venezuelan Government for the first time in history for failing to meet
the recommendations made by that Commission as well as violating the fundamental
rights of reporters and workers with RCTV.

You see, that Court had warned the Venezuelan Government of
not attacking the reporters of RCT as well as asking for the prosecution of
anyone doing so.

This is a suit under international law, accusing the
Venezuelan Government of violating fundaments human rights of free speech.

Of course, Foreign
Minister and his
wife President of the National Assembly, called this Court a spokesman for
the opposition and claimed no rights are being violated, since they could not
recognize one if they saw it.

Teodoro Petkoff was talking
the other day about the fact that he knew actor Yanis Chimaras, who at one time was a member of Petkoff´s party Movimiento al Socislismo and who was killed
the other day in an apparent robbery. He was clearly quite offended by the
words of Minister of Interior and Justice Carreño, as shown in this Editorial
today.Chimaras and Carreño by
Teodoro Petkoff in Tal Cual

When you hear the
statements of Pedro Carreño, Minister, for now, of Interior and Justice, about
the beastly assassination of Yanis Chimaras, one can not but ask how long we
have to go before we touch the bottom of this ravine through which we have been
falling through in the last few years. Carreño said that it was suspicious the
coincided of this crime against Yanis and the one that took place a week
earlier against the leader of the motorcycle organization. Both, note Carreño,
were militants of the “process”, thus, always according to the sage Minister,
one could suspect that some sectors of the opposition could be behind both
murders.

This manipulation is pure
indecency.

As big as that of some of
the “reporters” of one of the TV channels of officialdom that
tried-unsuccessfully by the way- to get out of Lucy, Yanis’ wife, a statement
against RCTV. To use in such a crude, inhuman and clumsy way Yanis’ political
militancy, particularly in moments of so much sorrow for his family, colleagues
and friends, slating the case and insinuating, against all evidences, the
possibility of a political crime, which could be attributed generically to the
“opposition” (besides trying to use the unfortunate circumstance to attack
RCTV) happens to be a thru monstrosity, a total loss of the sense of
proportion.

From this tribune we want
to call to reflection the main actors of this outrageous behavior. The country
is sufficiently and unfortunately polarized so as to try to take advantage of
hurtful circumstances-in this case, the death of a dear and popular actor-which
generate unanimous reactions of affliction and solidarity among Venezuelans and
artificially accentuate with it, the political differences, powering hate among
fellow countrymen. We know well that in this matter nobody should throw the
first stone, but the responsibility of people in Government in trying to
prevent that we reach aberrant levels of dividing victims of tragedies between
“our dead” and “the others”, is much larger than that of any other sector

A Minister has no right to
speak the way in which Pedro Carreño did.

When a society reaches the
point of being indifferent in the face of these conducts it is because the
deaths of “the others”, specially the tragic an unexpected ones, have been
trivialized in such a way that they can be employed, with a shrug of the
shoulders, as a threatening weapon against those that think differently. The
political evolution of the country cannot be rules by the premise that in this
terrain “anything is valid”. Not everything can be valid, no matter how rough
that political controversy in itself may be. Even for war there are conditions
established by the Geneva Convention; not even in war everything is valid. In
politics, even with more reason, there are limits that should never breached
because of the danger that, as Mahatma Gandhi said, with an everyday policy of
an eye for an eye, one day we will all be blind.

Cesar Marin, Amnesty International’s representative in Venezuela said today at a local conference that there are 1,000 deaths everyday in the world caused by gunshots. Venezuela, with 0.3% of the population has 4.4% of these deaths. It is estimated that there are five times more handguns than the 1.5 million that are formally registered.

You hear what you think are firecrackers in the barrio next door. You wife looks out the window. She says they are shots and the cops are coming. You go to the window and see the cops carrying the dead body out. Another senseless death. This guy is not even likely to be mentioned by the papers tomorrow. This is the daily reality whether you are known or not.

And this is one of
the articles from Latin American newspapers that irked the Lt. Colonel. El
Mercurio is Chile’s
premier newspaper and it was the subject of the same pressures and
self-censorship during the days of that other Dictator Augusto Pinochet, so they
know exactly what the mechanisms and strategies of these types of Governments
are.

Hugo
Chávez has left aside even the appearances of a democratic regime. In the same
days in which he has praetorized the Armed Forces, imposing on them the
slogan“socialism or death”, and he
announces a mandatory program of Marxist indoctrination in all companies, he
gets ready to give freedom of expression another blow, when he confirms that he
will shut down Radio Caracas Television (RCTV) on May 27th: he did
not renew the concession because he considers it a coupster media station. Each
night, his brigades cover the walls of the station with graffiti that says
things like “fascist station”. The police and the courts, controlled by Chavez,
do nothing.

The
shutdown of RCTV has been criticized by the Catholic Church and by voices and
international organizations (like the Secretary General of the OAS, Jose Miguel
Insulza, the Chilean Senate, SIP), as well as many members of the
telecommunications media. An injunction has also been presented in the
Interamerican Human Rights Court. But beyond its testimonial value, there is
little these protests can do against a Government that controls all the
institutions of the State and silences the media: the Venezuelan Minister of
Information has responded by denouncing a supposed “confabulation” by the group
of dailies of the Americas-including “El Mercurio” to initiate a campaign of
“lies” against the Chavista Government. In reality that group of papers has
acted invariably in the defense of human rights-to cite some examples, in April
1992, against censorship in Peru,
in November 1994, with respect to the “reform” in Mexico,
in June 1997, of “La Nacion” in Argentina
and will continue to do it.

Even
with all this, last Saturday, a small ray of hope was seen for basic liberties
in Venezuela,
when thousands of people took to the streets to protest the closing of RCTV.
Convoked by opposition leaders and the workers of the TV station the march
traveled across the center of the city. It is believed that tension will
increase as the date of the closing approaches. “If they shut down one, they
will shut them all down” said a protester. The Government declared an “alert” n
the face of possible plans of “radical” opposition groups that would look to
assassinate reporters to create a climate of violence and blame the Executive”
None of this happened but there seems to be in it a new threat to dissident
reporters. In any case, the Chavista warning to the media is explicit: if you
“don’t behave, you will enjoy the same fate as RCTV”.

According
to polls more than 80Y% of the population rejects this closing and the
Directors of the broadcasting station announce that, in one way or another,
they will continue working after May 28th: “We will continue to
denounce Chavez. This is not going to die on May 27th. Their fight
deserves the backing of all democrats in the Continent.